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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 9, 1999
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MedPartners, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-27276
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(Commission File Number)
63-1151076
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(IRS Employer Identification Number)
3000 Galleria Tower, Suite 1000, Birmingham, Alabama 35244
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(Address of principal executive offices)
Registrant's telephone number, including area code: (205) 733-8996
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page: 4
Total Number of Pages: 41
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Item 5. Other Events.
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On April 9, 1999, MedPartners, Inc., a Delaware corporation ("MedPartners")
issued a press release (the "Press Release") announcing, among other things,
that MedPartners and the State of California reached agreement on the principal
terms of a proposed comprehensive settlement regarding MedPartners' California
physician practice management operations. The proposed settlement (the
"Settlement") establishes a transition plan for the orderly and timely
disposition of MedPartners' California physician practice management operations
(including the existing operations of MedPartners Provider Network, Inc.
("MPN")), continued funding of MedPartners' California physician practice
management operations pending such disposition and restoration of MPN's assets,
operations and management responsibilities to MPN and its former officers and
directors. Under the terms of the settlement MPN will operate as a debtor-in-
possession under the bankruptcy code, subject to oversight and supervision of a
new court-appointed state conservator. The Press Release is filed herewith as
Exhibit (99)-1 and is incorporated herein by reference.
On April 13, 1999, MedPartners and the State of California Department of
Corporations entered into a letter of intent relating to the Settlement. The
Settlement is subject to, among other things, negotiation and execution of
definitive agreements among the various interested parties and certain other
approvals.
On April 14, 1999, MedPartners completed the Sixth Amendment (the
"Amendment") to the Amended and Restated Credit Agreement dated as of June 9,
1998 (the "Credit Agreement"). Subject to the terms and conditions of the
Amendment, the Amendment modifies the Credit Agreement, among other things, to
(i) permit MedPartners to enter into a comprehensive settlement agreement and
transition plan with the State of California, certain health care service plans,
hospitals and providers; (ii) permit the sale or other disposition of all of the
properties and assets of MedPartners' California physician practice management
operations, with proceeds remaining in California to be used to satisfy
liabilities and obligations of MedPartners' California physician practice
management operations, including MPN's liabilities and obligations; (iii)
increase to $215 million (of which $15 million is available solely to pay
amounts under certain promissory notes), from $125 million, the amount of net
asset sale proceeds available to MedPartners for use in its business and
operations in the ordinary course; and (iv) modify certain financial ratios for
the periods ending on or after March 31, 1999. The Amendment is filed herewith
as Exhibit (10)-1 and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
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(c) Exhibits
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Exhibit No.
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(10)-1 Amendment No. 6 to the Loan Documents.
(99)-1 Text of Press Release of MedPartners, Inc., dated April 9, 1999.
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Signatures
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 22, 1999
MEDPARTNERS, INC.
By: /s/ James H. Dickerson, Jr.
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James H. Dickerson, Jr.
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Page No.
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(10)-1 Amendment No. 6 to the Loan Documents
(99)-1 Text of Press Release of MedPartners, Inc.,
dated April 9, 1999.
<PAGE>
Exhibit (10)-1
Amendment No. 6 to the Loan Documents
AMENDMENT dated as of April 14, 1999 to the Amended and Restated
Credit Agreement dated as of June 9, 1998 (as amended and otherwise modified by
Amendment and Waiver No. 1 to the Loan Documents dated as of December 4, 1998,
Amendment No. 2 to the Loan Documents dated as of January 13, 1999, Amendment
No. 3 to the Loan Documents dated as of February 9, 1999, Amendment and Waiver
No. 4 to the Loan Documents dated as of March 18, 1999 and Amendment and Waiver
No. 5 to the Loan Documents dated as of April 1, 1999, the "Credit Agreement")
among MedPartners, Inc., a Delaware corporation (the "Borrower"), the Lenders
party thereto, NationsBank, N.A., as the Initial Issuing Bank and the Swing Line
Bank thereunder, Credit Lyonnais New York Branch, The First National Bank of
Chicago and Morgan Guaranty Trust Company of New York, as the Syndication Agents
therefor, NationsBanc Montgomery Securities LLC, as the Arranger therefor, and
NationsBank, N.A., as the Administrative Agent for the Lender Parties
thereunder. Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified therefor in the Credit Agreement.
Preliminary Statements
(1) The Borrower has requested that the Lender Parties agree to amend
the Credit Agreement in order, among other things, (a) to permit the Borrower
and its Subsidiaries to enter into a comprehensive settlement agreement and
transition plan (the "California Transition Plan") with the State of California
and certain major health care service plans, hospitals and other providers
engaged in business with one or more of the California Subsidiaries (as defined
in Section 1) in order to restore all of the property, assets, operations and
management responsibilities of MPN to MPN itself as the debtor in possession
under Chapter 11 of the United States Bankruptcy Code and to the Borrower (with
the conservator of MPN continuing to have oversight and supervisory
responsibilities therefor) and to permit the sale or other disposition of all of
the property and assets of the California Subsidiaries (and, solely to the
extent comprising part of the physician practice management businesses of the
Borrower in the State of California, of the Borrower) and the satisfaction of
all liabilities and obligations of the Borrower and its Subsidiaries related
thereto, all with the agreement and approval of the appropriate federal
bankruptcy court, California state court and other Governmental Authorities, (b)
to permit the Borrower to prepay its obligations to AHP Holdings, Inc. and Aetna
U.S. Healthcare Inc. under the promissory notes dated May 1, 1997 (which
promissory notes are described in items 2 and 3 of Schedule 4.01(y) to the
Credit Agreement), (c) to increase the aggregate portion of Net Cash Proceeds
from one or more sales, leases, transfers or other dispositions of property and
assets of the Borrower and its Subsidiaries effected pursuant to Sections
5.02(d)(vii), 5.02(d)(viii) and 5.02(d)(xi) of the Credit Agreement that may be
retained by the Borrower and its Subsidiaries for use in their businesses and
operations in the ordinary course to $215,000,000 (of which $15,000,000 shall be
available solely to pay amounts owing to AHP Holdings, Inc. and/or and Aetna
U.S. Healthcare Inc. under the revised terms of the promissory notes referred to
above in clause (b)) and, within such increased retained Net Cash Proceeds
limitation, to increase the percentage of Net Cash Proceeds from the sale of KS-
PSI of Texas, L.P. that may be retained by the Borrower and its Subsidiaries for
use in their businesses and operations and (d) to modify the requirements of
Sections 5.04(a), 5.04(b) and 5.04(c) of the Credit Agreement to permit a
greater Leverage Ratio and a lower Fixed Charge Coverage Ratio and Interest
Coverage Ratio for, and at all times during, the periods ending on or after
March 31, 1999.
(2) The Required Lenders have indicated their willingness to agree to
amend the terms and conditions of the Credit Agreement described above in
Preliminary Statement (1) on the terms and subject to the satisfaction of the
conditions set forth herein.
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and in the Loan Documents, the parties
hereto hereby agree as follows:
SECTION 1. Amendments of Certain Provisions of the Credit Agreement.
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The Credit Agreement is, upon the occurrence of the Amendment Effective Date (as
hereinafter defined), hereby amended to read as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended to add the
following new definitions in their appropriate alphabetical order:
""Amended Aetna Note" means the Consolidated Replacement
Promissory Note dated April 15, 1999 from the Borrower to AHP
Holdings, Inc. and/or and Aetna U.S. Healthcare Inc. in an aggregate
amount of $20,000,000, payable by its terms in three installments of
$7,500,000 on each of September 30, 1999 and December 31, 1999 and
$5,000,000 on March 31, 2000, a copy of which has been delivered to
the Administrative Agent and the Lender Parties.
"Amendment No. 6 Effective Date" means the first date on which
all of the conditions precedent to the effectiveness of Amendment No.
6 to the Loan Documents were satisfied.
"California Property and Assets" means all of the property and
assets of the California Subsidiaries (and, solely to the extent
comprising part of the physician practice management businesses of the
Borrower in the State of California, of the Borrower).
"California Major Plans" means, collectively, Foundation Health
Systems, Inc., CIGNA Corporation, PacifiCare Health Systems, Inc. and
Wellpoint Health Networks, Inc. or one or more of their affiliates and
may include one or more other health care service plans engaged in
business with one or more of the California Subsidiaries.
"California Subsidiaries" means the Excluded Subsidiaries set
forth on Part C of Schedule 4.01(b) hereto and the Captive
Professional Corporations set forth on Part D of Schedule 4.01(b)
hereto.
"California Transition Plan" means the comprehensive settlement
agreement and transition plan (and related agreements, instruments and
other documents) to be entered into among the Borrower, the State of
California, the California Major Plans and certain hospitals and other
providers engaged in business with one or more of the California
Subsidiaries in order to permit the sale or other disposition of the
California Property and Assets and the satisfaction of all liabilities
and obligations of the Borrower and its Subsidiaries related thereto;
provided, however, that such comprehensive settlement agreement and
transition plan shall include as conditions to any of the Obligations
of the Borrower or any of its Subsidiaries thereunder:
(a) the making of an unsecured loan from one or more of the
California Major Plans to the Borrower or one or more of the
prospective purchasers of the California Property and Assets in
an aggregate principal amount of at least
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$25,000,000 and otherwise on terms and conditions expressly
permitted under the Loan Documents;
(b) the agreement of all of the California Major Plans (i)
to take back all of their institutional risk associated with the
health care service providers in the State of California as of no
later than June 30, 1999 and (ii) to enter into replacement
contracts directly with purchasers of the California Property and
Assets for capitation payments and professional risk on the same
economic terms as are set forth in the existing contracts of MPN
or on such other terms as shall be agreed between the applicable
California Major Plans and health care service providers (or the
agreement by each such California Major Plan to consent to the
assignment by MPN to any such purchaser of its existing contracts
for such payments and risk);
(c) the agreement of all of the California Major Plans not
to reduce the levels of assigned enrollees or revenue payments to
the clinics and practice groups comprising part of the California
Subsidiaries below levels that were in effect therefor as of
March 1, 1999 (or, in the case of Wellpoint Health Network, Inc.
or its affiliates, 90% of the levels therefor that were in effect
as of March 1, 1999), subject to (i) maintenance by the
California Subsidiaries of adequate physician staffing, (ii)
continued compliance by the Borrower and the applicable
California Subsidiaries with the terms of the related "network
provider agreements", (iii) sale of the related clinics or
practice groups comprising part of the California Subsidiaries on
or prior to June 30, 1999 and (iv) any order or decree from an
applicable court or other Governmental Authority; provided that
such agreement may provide for each of the California Major Plans
to take actions in the ordinary course of their business so long
as such actions are in compliance with the Knox-Keene Health Care
Service Plan Act of 1975;
(d) the agreement of all of the hospitals party thereto that
they will set off amounts received by them from the Borrower or
any of the California Subsidiaries prior to the adoption of such
settlement agreement and transition plan against not less than
$25,000,000 of trade or other accounts payable owing to them from
the Borrower or any of the California Subsidiaries;
(e) the execution and delivery of an amendment to the MPN
Management Agreement by the Borrower and MPN that provides, at a
minimum, for the Borrower to receive reimbursement on no less
frequently than a quarterly basis of all of the costs and
expenses incurred by it in the performance of its Obligations
under the MPN Management Agreement and for the termination of the
MPN Management Agreement upon the termination or expiration of
such settlement agreement and transition plan; and
(f) the restoration of all of the property, assets,
operations and management responsibilities of MPN to MPN itself
as the debtor in possession under Chapter 11 of the United States
Bankruptcy Code and to the Borrower (with the conservator of MPN
continuing to have not more than oversight and supervisory
responsibilities therefor).
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In addition, such settlement agreement and transition plan, and all of
the agreements, instruments and other documents related thereto, shall
not require the issuance of a Letter of Credit in favor of the parties
thereto (or any of them) in an aggregate Available Amount of more than
$25,000,000 and, to the extent not expressly set forth in the
immediately preceding sentence or otherwise in Amendment No. 6 to the
Loan Documents, shall be in form and substance satisfactory to the
Required Lenders. For purposes of the Loan Documents, the California
Transition Plan shall not be deemed to have been adopted until all of
the following conditions precedent have been satisfied:
(A) all of the Governmental Authorizations, and all of the
consents, approvals and authorizations of, notices and filings to
or with, and other actions by, any other Person necessary in
connection with the California Transition Plan (including,
without limitation, the requisite approvals of the applicable
federal bankruptcy court and state court of the definitive
agreements, instruments and other documents setting forth the
terms and conditions of the California Transition Plan, the sale
of the California Property and Assets and the assumption by MPN
of the amended Management Agreement) shall have been obtained
(without the imposition of any conditions that could reasonably
be expected to adversely affect the rights or interests of the
Administrative Agent or the Guaranteed Parties) and shall remain
in full force and effect;
(B) the California Major Plans shall have agreed to make the
unsecured loan to the Borrower or the prospective purchasers of
the California Property and Assets described above in clause (a)
of this definition;
(C) the Administrative Agent and the Lender Parties shall
have received (1) copies of all of the agreements, instruments
and other documents setting forth the terms and conditions of the
California Transition Plan (including, without limitation, all
judgments and orders to be entered by any court or other
applicable Governmental Authority related thereto) in each case
duly executed by the parties thereto, (2) copies of all of the
reports, analyses and opinions being delivered pursuant to the
terms of the California Transition Plan to the Borrower, the
State of California or any of the other parties to the California
Transition Plan that evaluate or analyze all or any portion of
the property, assets, liabilities, businesses or operations of
the Borrower or any of its Subsidiaries or any aspect of the
California Transition Plan, (3) a certificate of the Borrower,
signed on behalf of the Borrower by a Responsible Officer thereof
and dated as of the date of adoption of the California Transition
Plan (the statements made in which certificate shall be true on
and as of such date), certifying as to:
(w) the absence of any proceedings (either pending or
overtly threatened) for the enjoinment, suspension,
revocation, termination or modification of any aspect of the
California Transition Plan;
(x) the accuracy in all material respects of the
representations and warranties made by the Borrower or any
of its Subsidiaries in the Loan Documents to which it is or
is to be a party as though made on and as of
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such date, before and after giving effect to the California
Transition Plan and to the transactions contemplated
thereby;
(y) the absence of any event occurring and continuing,
or resulting from the adoption of the California Transition
Plan or the consummation of the transactions contemplated
thereby, that would constitute a Default; and
(z) the satisfaction of the conditions precedent to the
adoption of the California Transition Plan set forth in the
agreements, instruments or other documents entered into in
connection therewith and in the Loan Documents, and
(4) a favorable opinion of King & Spalding, special counsel for
the Loan Parties, or other special counsel for the Loan Parties
reasonably acceptable to the Administrative Agent, in form and
substance satisfactory to the Required Lenders in their sole
discretion; and
(D) the adoption of the California Transition Plan on or
prior to June 30, 1999."
(b) The definition of "Caremark Receivables Securitization" set forth
in Section 1.01 of the Credit Agreement is hereby amended to delete the
amount "$75,000,000" in the seventh line thereof and to substitute therefor
the new amount "$100,000,000".
(c) The definition of "Fixed Charge Coverage Ratio" set forth in
Section 1.01 of the Credit Agreement is hereby amended (i) to restate
subclause (a)(ii) thereof in its entirety to read as follows:
"(ii) for any such period commencing on or after January 1, 2000, all
rental expense of the Borrower and the Restricted Subsidiaries for
such period", and
(ii) to restate subclause (b)(iii) thereof in its entirety to read as
follows:
"(iii) for any such period commencing on or after January 1, 2000, the
amount of Consolidated Rental Payments made or required to be made by
the Borrower and the Restricted Subsidiaries during such period and".
(d) The definition of "MPN Management Agreement" set forth in Section
1.01 of the Credit Agreement is hereby amended to add at the end of such
definition after the phrase "on the Amendment No. 4 Effective Date" the new
language "and as amended, supplemented or otherwise modified in accordance
with, and upon the adoption of, the California Transition Plan".
(e) The definition of "Permitted Sale-Leaseback Transaction" set
forth in Section 1.01 of the Credit Agreement is hereby amended to restate
clause (f) thereof in its entirety to read as follows:
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"(f) all of the Net Cash Proceeds received by the Borrower or
any of its Subsidiaries from any such sale, lease, transfer or other
disposition shall be applied, within two Business Days after the date
of receipt thereof by the Borrower or any of its Subsidiaries, to
reduce the Term Commitments in accordance with, and to the extent
required under, Section 2.05(b)(vi) and to prepay the Term Advances
outstanding at such time in accordance with, and to the extent
required under, Section 2.06(b)."
(f) The definition of "Unused Revolving Credit Commitment" set forth
in Section 1.01 of the Credit Agreement is hereby amended (i) to add in the
ninth line of subclause (b)(ii) thereof after the language "Sections
2.08(a) and 7.05," the new subclause reference "(1)" and (ii) to add at the
end of subclause (b)(ii) thereof after the phrase "in effect at such time"
the following new language:
" and (2) during the period commencing on the date of the consummation
of the sale of KS-PSI of Texas, L.P. pursuant to Section 5.02(d) and
ending on the earlier of (x) the date of adoption of the California
Transition Plan and (y) June 30, 1999, $25,000,000".
(g) Section 2.05(b) of the Credit Agreement is hereby amended (i) to
delete the language "or (x) of Section 5.02(d)" in the parenthetical to
subclause (vi)(A) thereof and to substitute therefor the new language ",
(x) or (xii) of Section 5.02(d)", (ii) to add in the first line of the
first sentence of clause (vii) thereof after the language "permanently
reduced on" the new subclause reference "(A)" and (iii) to add at the end
of the first sentence of clause (vii) thereof the following new language:
"or (B) June 30, 1999, if the adoption of the California Transition
Plan has not occurred on or prior to such date, by $25,000,000".
(h) Section 4.01(b) of the Credit Agreement is hereby amended to add
the following new sentence at the end of such subsection:
"Set forth on Part C of Schedule 4.01(b) hereto is a complete and
accurate list of all of the California Subsidiaries as of the
Amendment No. 6 Effective Date, showing, as to each such California
Subsidiary, the correct legal name thereof and stating, as of December
31, 1998, whether or not such California Subsidiary constitutes a
Material Subsidiary."
(i) Section 4.01 of the Credit Agreement is hereby further amended to
add the following new subsection (cc) at the end of such Section:
"(cc) Set forth on Schedule 4.01(cc) hereto is a complete and
accurate list as of the Amendment No. 6 Effective Date or as of the
date of the most recent amendment, supplement or other modification to
Schedule 4.01(cc) hereto (whether pursuant to Section 5.03(d)(v) or
otherwise) of all leases of real property under which the Borrower or
any of its Subsidiaries is the lessee, showing, as of such date, the
street address, city or other relevant jurisdiction, state, lessee,
related clinic or practice group, expiration date and annual rental
cost thereof and, if applicable, the Borrower or the Restricted
Subsidiary that is a guarantor thereof or co-obligor thereunder."
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(j) Section 5.01(i) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (i) thereof, (ii) to delete the
punctuation "." at the end of clause (ii) thereof and to substitute
therefor the new language "; and" and (iii) to add the following new clause
(iii) thereto:
"(iii) the performance by the Borrower from time to time after
the adoption of the California Transition Plan of its Obligations
under the California Transition Plan and the MPN Management Agreement
in accordance with the respective terms thereof."
(k) Section 5.02(b) of the Credit Agreement is hereby amended (i) to
restate clause (vii) thereof in its entirety to read as follows:
"(vii) Contingent Obligations of the Borrower guaranteeing all
or any portion of (A) the outstanding Obligations of any of the
Restricted Subsidiaries or (B) the outstanding Obligations under one
or more Operating Leases of any of the Excluded Subsidiaries that are
party to the Subsidiaries Guarantee; provided that each such
Obligation is otherwise permitted under the terms of the Loan
Documents and, in the case of subclause (vii)(B) above, each such
Obligation was created, incurred, assumed or otherwise in existence
prior to the Amendment No. 2 Effective Date and is set forth on
Schedule 4.01(cc);",
(ii) to delete the word "and" at the end of clause (xv) thereof, (iii) to
add the following new clauses (xvi) and (xvii) thereto:
"(xvi) unsecured Indebtedness of the Borrower owing to one or
more of the California Major Plans in an aggregate principal amount
not to exceed $25,000,000 at any time outstanding; provided that (A)
such Indebtedness (1) shall not have a maturity date or any scheduled
or mandatory redemption or repurchase date prior to June 30, 2001, (2)
shall not (x) accrue interest at a rate per annum at any time of more
than the rate of interest payable at such time on outstanding
Revolving Credit Advances or (y) be subject to any payment penalties
or premiums of any kind and (3) shall not be guaranteed or otherwise
credit enhanced by any of the Subsidiaries of the Borrower or any of
their property or assets, or subject any of the property or assets of
the Borrower or any of its Subsidiaries to any Lien, (B) the other
terms and conditions of such Indebtedness (and of any agreement or
other document entered into and of any instrument issued in connection
therewith) shall be no less favorable to the Borrower or any of its
Subsidiaries or to the rights or interests of the Guaranteed Parties
than the terms of the Senior Notes, except that such Indebtedness may
contain financial covenants on the same terms as are set forth in
Section 5.04 so long as such Indebtedness, by its terms, provides that
any amendment or waiver of, or consent to departure by the Borrower
from, any such financial covenant under the Loan Documents (including,
without limitation, any such amendment, waiver or consent that removes
or replaces any such covenant) is automatically (without any further
action by, or notice to or from, any holder of such Indebtedness or
any agent or trustee therefor) an amendment or waiver of, or consent
to departure by the Borrower from, any such covenant contained in the
agreements, instruments or other documents evidencing or otherwise
setting forth the terms of such Indebtedness, (C) copies of all of the
agreements, instruments and other documents evidencing or otherwise
setting forth the terms of such Indebtedness shall be delivered to the
Administrative Agent and the Lender Parties at least three Business
Days
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prior to the incurrence thereof by the Borrower and (D) immediately
before and immediately after giving pro forma effect to such
Indebtedness, no Default shall have occurred and be continuing;
(xvii) at any time after the date of the adoption of the
California Transition Plan, Indebtedness of the Borrower comprised
solely of its obligation to pay current accruals, accrued expenses and
medical claims payable and other accounts payable of one or more of
the California Subsidiaries (other than MPN) that, in the case of each
such California Subsidiary, have been created, incurred or assumed
thereby in the ordinary course of business and prior to the earlier of
(A) the date on which the clinics or practice groups comprising part
of such California Subsidiary are sold, leased, transferred or
otherwise disposed of by the Borrower or its applicable Subsidiaries
and (ii) July 31, 1999; provided that the obligation of the Borrower
to pay such current accruals, accrued expenses and medical claims
payable and other accounts payable of the applicable California
Subsidiaries shall be required under the terms of the California
Transition Plan; and", and
(iv) to renumber the existing clause (xvi) of Section 5.02(b) of the Credit
Agreement as clause (xviii) thereof.
(l) Section 5.02(d) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (xi) thereof, (ii) to add the
following new clause (xii) thereto:
(xii) the Borrower and its Subsidiaries may sell, transfer or
otherwise dispose of all (but not less than all) of their Equity
Interests in any of the California Subsidiaries, or all (other than an
immaterial portion) of the California Property and Assets of any such
California Subsidiary, in accordance with the California Transition
Plan; provided that immediately before and immediately after giving
pro forma effect to any such sale, transfer or other disposition, no
Default shall have occurred and be continuing; and",
(iii) to renumber the existing clause (xii) of Section 5.02(d) as clause
(xiii) thereof, (iv) to delete the language "or (xi)" in the newly
renumbered clause (xiii) thereof and to substitute therefor the new
language ", (xi) or (xii)" and (v) to restate the last two sentences
thereof in their entirety to read as follows:
"Notwithstanding any of the other provisions of this Section 5.02(d),
the Borrower and its Subsidiaries may retain up to 25% of the Net Cash
Proceeds received from time to time on or after the Amendment No. 1
Effective Date from one or more sales, leases, transfers or other
dispositions expressly permitted under clause (vii), (viii) or (xi) of
this Section 5.02(d) (or, solely in the case of any such sale of KS-
PSI of Texas, L.P. on or after the Amendment No. 6 Effective Date and
otherwise in accordance with clause (vii) of this Section 5.02(d), but
subject to the next succeeding sentence, the Borrower and its
Subsidiaries may retain 62% (up to a maximum amount of $80,000,000) of
the Net Cash Proceeds received from such sale) for use in their
businesses and operations in the ordinary course so long as the
aggregate amount of all such Net Cash Proceeds so retained by the
Borrower and its Subsidiaries does not exceed $215,000,000; provided,
however, that $15,000,000 of such permitted retained amount of Net
Cash Proceeds may be used by the Borrower solely for the payment of
amounts owing under the Amended Aetna Note when due and payable in
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accordance with the terms thereof. If the Borrower or its applicable
Subsidiaries elect to retain more than 25% of the Net Cash Proceeds
received thereby from the sale of KS-PSI of Texas, L.P. pursuant to
the terms of the immediately preceding sentence, then 100% of the next
$86,000,000 of Net Cash Proceeds received by the Borrower or any of
its Subsidiaries from one or more sales, leases, transfers or other
dispositions of their respective property and assets pursuant to
clause (vii), (viii) or (xi) of this Section 5.02(d) after the date of
consummation of the sale of KS-PSI of Texas, L.P., and all of the Net
Cash Proceeds received by the Borrower or any of its Subsidiaries from
any sale, lease, transfer or other disposition of their respective
property and assets pursuant to clause (vii), (viii) or (xi) of this
Section 5.02(d) and not otherwise permitted to be retained by the
Borrower and its Subsidiaries under the immediately preceding
sentence, shall be applied to reduce the Term Commitments in
accordance with, and to the extent required under, Section 2.05(b)(vi)
and to prepay the Term Advances outstanding at such time in accordance
with, and to the extent required under, Section 2.06(b)."
(m) Section 5.02(e) of the Credit Agreement is hereby amended (i) to
delete the language "pursuant to Section 5.02(b)(viii)" in subclause
(iii)(D)(2)(x) thereof and to substitute therefor the new language
"pursuant to Section 5.02(b)(vii), 5.02(b)(viii) or 5.02(b)(xvii)" and (ii)
to restate subclause (iii)(E) thereof in its entirety to read as follows:
"(E) the Borrower in MPN solely with the proceeds of the unsecured
loan from one or more of the California Major Plans made pursuant to
Section 5.02(b)(xvi) or, from time to time after the adoption of the
California Transition Plan, pursuant to the terms of the MPN
Management Agreement,".
(n) Section 5.02(h) of the Credit Agreement is hereby amended (i) to
add in the first line thereof after the clause reference "(i)" the new
language "Pay, prepay, redeem, purchase, defease or otherwise satisfy all
or any portion of the Amended Aetna Note, or", (ii) to add in the third
line thereof after the words "subordination terms of, any" the new word
"other", (iii) to add at the end of subclause (i)(B)(1) thereof after the
language "repayment of Surviving Indebtedness" the new language "or, after
the adoption of the California Transition Plan, the Amended Aetna Note" and
(iv) to restate clause (ii) thereof in its entirety to read as follows:
"(ii) Amend, modify or change in any manner any of the terms or
conditions of (A) the Senior Notes Documents, the TAPS Indenture, the
TAPS Purchase Contract or the Amended Aetna Note, (B) any of the other
Surviving Indebtedness, except (1) as otherwise permitted under
Section 5.02(b)(xiii) or (2) on terms and conditions no less favorable
to the Borrower and its Subsidiaries or to the Lender Parties than the
terms of the Loan Documents, or (C) the Caremark Receivables
Securitization Documents, except (1) to the extent necessary to
increase the aggregate principal amount paid by Park Avenue
Receivables Corporation and such financial institutions for all such
accounts receivable or interests therein and to be recovered from all
such accounts receivable or interests thereto to not more than
$100,000,000 at any time outstanding or (2) otherwise as, either
individually or in the aggregate, is not reasonably expected to have a
Material Adverse Effect or to adversely affect the rights or interest
of the Guaranteed Parties;".
<PAGE>
-10-
(o) Section 5.02(i) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (v) thereof, (ii) to delete the
punctuation "." at the end of clause (vi) thereof and to substitute
therefor the new language "; and" and (iii) to add the following new clause
(vii) thereto:
"(vii) any such agreement comprising part of the California
Transition Plan to the extent such agreement is on terms no less
favorable to the Borrower or any of its Subsidiaries or to the rights
or interests of the Guaranteed Parties than the terms of the Senior
Notes."
(p) Section 5.02(j) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (G) thereof, (ii) to delete the
punctuation "." at the end of clause (H) thereof and to substitute therefor
the new language "; and" and (iii) to add the following new clause (I)
thereto:
"(I) any agreement comprising part of the California Transition
Plan and applicable solely to the California Property and Assets."
(q) Section 5.02 of the Credit Agreement is hereby further amended to
add at the end of such Section 5.02 the following new subsection (r):
"(r) Obligations in Respect of the California Clinics. Not to
------------------------------------------------
create, incur or assume, or permit any of its Subsidiaries to create,
incur or assume, at any time on or after the earlier of (i) the date
on which such clinic or practice group is sold, leased, transferred or
otherwise disposed of by the Borrower or its applicable Subsidiaries
and (ii) July 31, 1999, any Obligations for or in respect of any of
the clinics or practice groups comprising part of the California
Subsidiaries."
(r) Section 5.03(d) of the Credit Agreement is hereby amended (i) to
delete the word "and" at the end of clause (iii) thereof, (ii) to delete
the punctuation "." at the end of clause (iv) thereof and to substitute
therefor the new language "; and" and (iii) to add the following new clause
(v) thereto:
"(v) duly certifying, if necessary, an amendment or supplement
to Schedule 4.01(cc) hereto setting forth all of the information
necessary to insure that Schedule 4.01(cc) hereto remains complete and
accurate as to the subject matter thereof."
(s) Section 5.03(t) of the Credit Agreement is hereby amended to add
in the third line thereof after the words "the assertion or occurrence
thereof," the new language "but only so long as the California Transition
Plan has not been adopted."
(t) Section 5.03 of the Credit Agreement is hereby further amended to
add the following new subsection (u) thereto:
(u) California Transition Plan. As soon as possible and in any
--------------------------
event within five Business Days after:
<PAGE>
-11-
(i) a Responsible Officer of the Borrower or any of its
Subsidiaries knows or has reason to know of the occurrence of
each default or termination event under any instrument, agreement
or other document evidencing or otherwise setting forth the terms
and conditions of the California Transition Plan continuing on
the date of such statement, a statement of such Responsible
Officer or a Responsible Officer of the Borrower setting forth
the details of such default or termination event (including,
without limitation, the anticipated effect thereof), the period
of time such default or termination event has existed and been
continuing and the actions that the Borrower and/or any of its
Subsidiaries have taken and/or propose to take with respect
thereto; and
(ii) the furnishing or receipt thereof, copies of any
periodic or other material statement or report furnished to or
received from the State of California, the conservator of MPN,
any of the California Major Plans, hospitals and other providers
party to the California Transition Plan or any applicable federal
or state court or other Governmental Authority pursuant to the
terms of the California Transition Plan (including, without
limitation, any amendments, waivers or consents given or
requested in respect thereof) and not otherwise required to be
furnished to the Administrative Agent and the Lender Parties
pursuant to any other clause of this Section 5.03.", and
to reletter the existing subsection (u) of Section 5.03 of the Credit
Agreement as subsection (v) thereof.
(u) Section 5.04 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
" SECTION 5.04. Financial Covenants. So long as any of the
-------------------
Advances or any of the other Obligations of any Loan Party under or in
respect of any of the Loan Documents shall remain unpaid, any of the
Letters of Credit shall remain outstanding or any of the Lender
Parties shall have any Commitment hereunder, the Borrower will:
(a) Leverage Ratio. Maintain a Leverage Ratio at all
--------------
times of not more than the amount set forth below for the
period set forth below:
<TABLE>
<CAPTION>
Period Ratio
----------------------- -----
<S> <C>
March 31, 1999 through 7.50:1
June 29, 1999
June 30, 1999 through 6.75:1
September 29, 1999
September 30, 1999 through 6.25:1
December 30, 1999
December 31, 1999 through 6.00:1
March 30, 2000
</TABLE>
<PAGE>
-12-
<TABLE>
<CAPTION>
Period Ratio
----------------------- -----
<S> <C>
March 31, 2000 through 5.85:1
June 29, 2000
June 30, 2000 through 5.70:1
September 29, 2000
September 30, 2000 through 5.15:1
December 20, 2000
December 31, 2000 and 4.75:1
thereafter
</TABLE>
(b) Fixed Charge Coverage Ratio. Maintain a Fixed Charge
---------------------------
Coverage Ratio as of the last day of each Measurement Period of
not less than the amount set forth below for each Measurement
Period set forth below:
<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
----------------------- -----
<S> <C>
March 1999 1.15:1
June 1999 1.25:1
September 1999 1.30:1
December 1999 1.30:1
March 2000 1.30:1
June 2000 1.30:1
September 2000 1.35:1
December 2000 and 1.50:1
thereafter
(c) Interest Coverage Ratio. Maintain an Interest
-----------------------
Coverage Ratio as of the last day of each Measurement Period of
not less than the amount set forth below for each Measurement
Period set forth below:
Measurement Period
Ending In Ratio
--------------------- -----
<S> <C>
March 1999 1.25:1
June 1999 1.35:1
</TABLE>
<PAGE>
-13-
<TABLE>
<CAPTION>
Measurement Period
Ending In Ratio
----------------------- -----
<S> <C>
September 1999 1.45:1
December 1999 1.45:1
March 2000 1.50:1
June 2000 1.60:1
September 2000 1.75:1
December 2000 and 2.00:1"
thereafter
</TABLE>
(v) Section 6.01 of the Credit Agreement is hereby amended (i) to
add in the first line of subsection (q) thereof immediately prior to the
language "(i) any claim shall be asserted" the new language "at any time
prior to the adoption of the California Transition Plan,", (ii) to add at
the end of subsection (q) thereof the new word "or" and (iii) to add the
following new subsections (r) and (s) thereto:
"(r) an "Event of Default" (as defined in the Amended
Aetna Note) shall have occurred and be continuing under the Amended
Aetna Note; or
(s) any default or termination event shall have occurred
and be continuing under any of the agreements, instruments or other
documents evidencing or otherwise setting forth the terms and
condition of the California Transition Plan (including, without
limitation, any such agreements, instruments or other documents
evidencing or otherwise setting forth the terms and conditions of the
unsecured loan from the California Major Plans described in clause (a)
of the definition of "California Transition Plan" set forth in Section
1.01) and such default or termination event shall continue after the
applicable grace period, if any, specified in any such agreement,
instrument or other document;".
(w) Schedule 4.01(b) to the Credit Agreement is hereby amended (i)
to delete Part B thereof in its entirety and to substitute therefor the new
Part B of Schedule 4.01(b) to the Credit Agreement attached hereto as Annex
A, (ii) to add the new Part C of Schedule 4.01(b) to the Credit Agreement
attached hereto as Annex B and (iii) to add the new Part D of Schedule
4.01(b) to the Credit Agreement attached hereto as Annex C.
(x) The Credit Agreement is hereby further amended to add the new
Schedule 4.01(cc) to the Credit Agreement attached hereto as Annex D.
(y) All cross-references in the Credit Agreement to the existing
Sections 5.02(b)(xvi), 5.02(d)(xii) and 5.03(u) thereof are, upon the
occurrence of the Amendment Effective Date, hereby deleted in their
entirety and replaced with new references to Sections 5.02(b)(xviii),
5.02(d)(xiii) and 5.03(v) thereof, respectively.
<PAGE>
-14-
SECTION 2. Conditions Precedent to the Effectiveness of This
-------------------------------------------------
Amendment. This Amendment shall become effective as of the first date (the
- ---------
"Amendment Effective Date") on which, and only if, each of the following
conditions precedent shall have been satisfied:
(a) The Administrative Agent shall have received (i) counterparts
of this Amendment executed by the Borrower and the Required Lenders or, as
to any of the Lender Parties, advice satisfactory to the Administrative
Agent that such Lender Party has executed this Amendment and (ii) the
Consent attached hereto shall have been executed and delivered by each of
the Loan Parties (other than the Borrower).
(b) The Lender Parties shall have received a copy, certified by a
Responsible Officer of the Borrower, of (i) the letter of intent or similar
agreement entered into by the Borrower and the State of California
regarding the California Transition Plan, together with the most recent
indicative summary of terms and conditions of the California Transition
Plan, and (ii) the consolidated replacement promissory note to be entered
into with AHP Holdings, Inc. and/or and Aetna U.S. Healthcare Inc., in form
and substance satisfactory to the Required Lenders, which upon the
execution and delivery thereof will replace in full the items of Surviving
Indebtedness set forth as items 2 and 3 on Schedule 4.01(y) to the Credit
Agreement.
(c) The representations and warranties set forth in each of the
Loan Documents shall be correct in all material respects on and as of the
Amendment Effective Date, before and after giving effect to this Amendment,
as though made on and as of such date (except (i) for any such
representation and warranty that, by its terms, refers to a specific date
other than the Amendment Effective Date, in which case as of such specific
date, (ii) that the Consolidated financial statements of the Borrower and
its Subsidiaries referred to in Sections 4.01(f) and 4.01(g) of the Credit
Agreement shall be deemed to refer to the Consolidated financial statements
of the Borrower and its Subsidiaries comprising part of the Required
Financial Information most recently delivered to the Administrative Agent
and the Lender Parties pursuant to Sections 5.03(b) and 5.03(c),
respectively, on or prior to the Amendment Effective Date and (iii) that
the forecasted Consolidated financial statements of the Borrower and its
Subsidiaries referred to in Section 4.01(h) of the Credit Agreement shall
be deemed to refer to the forecasted Consolidated financial statements of
the Borrower and its Subsidiaries most recently delivered to the
Administrative Agent and the Lender Parties prior to the Amendment
Effective Date).
(d) No event shall have occurred and be continuing, or shall result
from the effectiveness of this Amendment, that constitutes a Default.
(e) The Borrower shall have paid to the Administrative Agent, for
the account of each of the Lenders that has executed and delivered a
counterpart of this Amendment to the Administrative Agent on or prior to
the Amendment Effective Date (or advised the Administrative Agent in a
manner satisfactory to it that such Lender has executed this Amendment on
or prior to the Amendment Effective Date), an amendment fee of 0.25% on the
aggregate Commitments of such Lender.
(f) All of the accrued fees and expenses of the Administrative
Agent, the Arranger and the Lender Parties (including the accrued fees and
expenses of counsel for the Administrative Agent) shall have been paid in
full.
<PAGE>
-15-
The effectiveness of this Amendment is further conditioned upon the accuracy of
all of the factual matters described herein. This Amendment is subject to the
provisions of Section 8.01 of the Credit Agreement.
SECTION 3. Reference to and Effect on the Loan Documents. (a) On
---------------------------------------------
and after the Amendment Effective Date, each reference in the Credit Agreement
to "this Agreement", "hereunder", "hereof" or words of like import referring to
the Credit Agreement, and each reference in the Notes and each of the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement, the Notes and each of the other Loan
Documents, as amended by the amendments specifically provided above in Section
1, are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed. The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any of the Guaranteed Parties or the
Administrative Agent under any of the Loan Documents, or constitute a waiver of
any provision of any of the Loan Documents.
SECTION 4. Costs and Expenses. The Borrower hereby agrees to pay,
------------------
upon demand, all of the reasonable costs and expenses of the Administrative
Agent and the Arranger (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Amendment and all of the agreements, instruments and other documents
delivered or to be delivered in connection herewith, all in accordance with the
terms of Section 8.04 of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers, thereunto duly authorized, as of the
date first written above.
THE BORROWER
MEDPARTNERS, INC.
By /s/ Peter J. Clemens, IV
-------------------------------------
Name: Peter J. Clemens, IV
Title: Vice President & Treasurer
THE ADMINISTRATIVE AGENT
<PAGE>
-16-
NATIONSBANK, N.A.
By /s/ Michael D. Monte
--------------------------------------
Name: Michael D. Monte
Title: Senior Vice President
THE LENDER PARTIES
NATIONSBANK, N.A., as a Lender,
the Swing Line Bank and the Issuing Bank
By /s/ Michael D. Monte
--------------------------------------
Name: Michael D. Monte
Title: Senior Vice President
AMSOUTH BANK
By /s/ Allison J. Sanders
--------------------------------------
Name: Allison J. Sanders
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Michael D. Monte
--------------------------------------
Name: Michael D. Monte
Title: Senior Vice President
THE CHASE MANHATTAN BANK
By /s/ Dawn Lee Lum
--------------------------------------
Name: Dawn Lee Lum
Title: Vice President
<PAGE>
-17-
CITIBANK, N.A.
By
-------------------------------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Henry Reukauf
-------------------------------------
Name: Henry Reukauf
Title: Vice President
DEBT STRATEGIES FUND, INC.
By
-------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ L. Richard Schiller
-------------------------------------
Name: L. Richard Schiller
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/ Joseph H. Towell
-------------------------------------
Name: Joseph H. Towell
Title: Senior Vice President
FLOATING RATE PORTFOLIO
BY: INVESCO Senior Secured Management, Inc.,
as attorney in fact
By /s/ Kathleen A. Lenarcic
-------------------------------------
Name: Kathleen A. Lenarcic
Title: Authorized Signatory
<PAGE>
-18-
KZH HIGHLAND-2 LLC
By /s/ Dennis Kildez
--------------------------------------
Name: Dennis Kildez
Title: Authorized Agent
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By
--------------------------------------
Name:
Title:
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO, INC.
BY: MERRILL LYNCH ASSET
MANAGEMENT L.P., as Investment Advisor
By
--------------------------------------
Name:
Title:
MERRILL LYNCH GLOBAL INVESTMENT
SERIES: INCOME STRATEGIES
PORTFOLIO
BY: MERRILL LYNCH ASSET
MANAGEMENT, L.P., as Investment
Advisor
By
--------------------------------------
Name:
Title:
ML CBO IV (CAYMAN) LTD.
BY: HIGHLAND CAPITAL MANAGEMENT, L.P.,
as Collateral Manager
By /s/ James Dondero
--------------------------------------
Name: James Dondero, CFA, CPA
Title: President
<PAGE>
-19-
ML CLO XX PILGRIM AMERICA
(CAYMAN) LTD.
BY: PILGRIM INVESTMENTS, INC.,
as Investment Manager
By /s/ Jeffrey A. Bakalar
-------------------------------------
Name: Jeffrey A. Bvakalar
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Anna Marie Fallon
-------------------------------------
Name: Anna Marie Fallon
Title: Vice President
PAM CAPITAL FUNDING, LP
BY: HIGHLAND CAPITAL MANAGEMENT, L.P.,
as Collateral Manager
By /s/ James Dondero
--------------------------------------
Name: James Dondero, CFA, CPA
Title: President
PAMCO CAYMAN, LTD.
BY: HIGHLAND CAPITAL MANAGEMENT, L.P.,
as Collateral Manager
By /s/ James Dondero
--------------------------------------
Name: James Dondero, CFA, CPA
Title: President
PILGRIM PRIME RATE TRUST
BY: PILGRIM INVESTMENTS, INC.,
as Investment Manager
By /s/ Jeffrey A. Bakalar
-------------------------------------
Name: Jeffrey A. Bakalar
Title: Vice President
<PAGE>
-20-
SCOTIABANC INC.
By /s/ Dana Maloney
--------------------------------------
Name: Dana Maloney
Title: Relationship Manager
SRV-HIGHLAND, INC.
By /s/ Kelly C. Walker
--------------------------------------
Name: Kelly C. Walker
Title: Vice President
STEIN ROE & FARNHAM
INCORPORATED,
as Agent for KEYPORT LIFE INSURANCE
COMPANY
By /s/ Brian W. Good
--------------------------------------
Name: Brian W. Good
Title: Vice President & Portfolio Manager
TORONTO DOMINION (TEXAS), INC.
By /s/ Sonja R. Jordan
--------------------------------------
Name: Sonja R. Jordan
Title: Vice President
VAN KAMPEN PRIME RATE INCOME
TRUST
By /s/ Jeffrey Maillet
---------------------------------------
Name: Jeffrey Maillet
Title: Senior Vice President & Director
VAN KAMPEN SENIOR INCOME TRUST
By /s/ Jeffrey Maillet
---------------------------------------
Name: Jeffrey Maillet
Title: Senior Vice President & Director
<PAGE>
-21-
VAN KAMPEN CLO II, LIMITED
BY: VAN KAMPEN MANAGEMENT, INC.,
as Collateral Manager
By /s/ Jeffrey Maillet
---------------------------------------
Name: Jeffrey Maillet
Title: Senior Vice President & Director
WACHOVIA BANK, N.A.
By /s/ John C. Canty
---------------------------------------
Name: John C. Canty
Title: Assistant Vice President
<PAGE>
Consent to Amendment No. 6
to the Loan Documents
As of April 14, 1999
Reference is made to Amendment No. 6 to the Loan Documents dated as of
April 14, 1999 (the "Amendment") to the Amended and Restated Credit Agreement
dated as of June 9, 1998 (as amended and otherwise modified by Amendment No. 1
to the Loan Documents dated as of December 4, 1998, Amendment No. 2 to the Loan
Documents dated as of January 13, 1999, Amendment No. 3 to the Loan Documents
dated as of February 9, 1999, Amendment and Waiver No. 4 to the Loan Documents
dated as of March 18, 1999 and Amendment and Waiver No. 5 to the Loan Documents
dated as of April 1, 1999, the "Credit Agreement") among MedPartners, Inc., a
Delaware corporation, the Lenders party thereto, NationsBank, N.A., as the
Initial Issuing Bank and Swing Line Bank thereunder, Credit Lyonnais New York
Branch, The First National Bank of Chicago and Morgan Guaranty Trust Company of
New York, as the Syndication Agents therefor, NationsBanc Montgomery Securities
LLC, as Arranger therefor, and NationsBank, N.A., as the Administrative Agent
for the Lender Parties thereunder. Capitalized terms not otherwise defined
herein shall have the same meanings as specified therefor in the Credit
Agreement.
Each of the undersigned, as a guarantor under the Subsidiaries
Guarantee dated as of June 9, 1998 (as modified to the date hereof, the
"Subsidiaries Guarantee") in favor of the Guaranteed Parties, hereby consents to
the execution and delivery of the Amendment and the performance of the Credit
Agreement, as amended thereby, and hereby confirms and agrees that,
notwithstanding the effectiveness of the Amendment, the Subsidiaries Guarantee
is, and shall continue to be, in full force and effect and is hereby in all
respects ratified and confirmed, except that each reference in the Subsidiaries
Guarantee to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by the Amendment.
This Consent may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same Consent. Delivery of an executed counterpart of a
signature page to this Consent by telecopier shall be effective as delivery of a
manually executed counterpart of this Consent.
This Consent shall be governed by, and construed in accordance with,
the laws of the State of New York.
MEDGP, INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
MEDPARTNERS ACQUISITION CORPORATION
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
<PAGE>
-2-
MEDPARTNERS AVIATION, INC.
By /s/ Sara J. Finley
-------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
MEDPARTNERS EAST, INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
GEORGIA MEDPARTNERS MANAGEMENT,
INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
MEDPARTNERS-TEXAS, INC.
By /s/ Michael Fitzgerald
-------------------------------------
Name: Michael Fitzgerald
Title: President & CEO
MEDPARTNERS INTEGRATED NETWORK-
CHANDLER, INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
<PAGE>
-3-
MEDPARTNERS PROFESSIONAL
MANAGEMENT CORPORATION
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
ADS HEALTH MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
By /s/ Sara J. Finley
-------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
HEALTHWAYS, INC.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
BAY AREA PRACTICE MANAGEMENT
GROUP, INC.
By /s/ Sara J. Finley
-------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
<PAGE>
-4-
CHS MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
CAREMARK INTERNATIONAL INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
CAREMARK INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
By /s/ Leisa Kizer
------------------------------------
Name: Leisa Kizer
Title: Treasurer
CAREMARK PHYSICIAN SERVICES OF TEXAS
INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
PRESCRIPTION HEALTH SERVICES, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-5-
STRATEGIC HEALTHCARE MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
CAREMARK INTERNATIONAL HOLDINGS INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
MEDPARTNERS PHYSICIAN SERVICES INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
CAREMARK RESOURCES CORPORATION
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
FRIENDLY HILLS HEALTHCARE
NETWORK INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-6-
NORTH SUBURBAN CLINIC LTD.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
MP MEDICAL MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
MEDPARTNERS ADMINISTRATIVE SERVICES,
INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
MEDPARTNERS MANAGED CARE, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
ACUTE CARE MEDICAL MANAGEMENT, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-7-
BGS HEALTHCARE, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
HEALTH SERVICES OF PEMBROKE LAKES, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
HOME HEALTH AGENCY OF GREATER MIAMI,
INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
MEDPARTNERS MEDICAL MANAGEMENT, INC.
(Formerly know as INPHYNET MANAGED CARE
CONTRACTING SERVICES, INC.)
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
MEDPARTNERS MANAGED CARE CONTRACTING
SERVICES OF CENTURY VILLAGE, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-8-
MEDPARTNERS MANAGED CARE OF SOUTH
BROWARD, INC.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
INPHYNET MEDICAL MANAGEMENT OF OHIO,
INC.
By /s/ Sara J. Finley
-----------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
SACHS, MORRIS & SKLAVER, INC.
By /s/ Sara J. Finley
-----------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
LFMG, INC.
By /s/ James H. Dickerson, Jr.
-----------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
PACIFIC MEDICAL GROUP, INC.
By /s/ Sara J. Finley
-----------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-9-
PACIFIC PHYSICIAN SERVICES, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PPS EAST, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PPS NORTH CAROLINA MEDICAL
MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PPS RIVERSIDE DIVISION ACQUISITION
AND MANAGEMENT CORP. I
By /s/ James H. Dickerson, Jr.
--------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PPS VALLEY MANAGEMENT, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-10-
PPS INDEMNITY, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PACIFIC PHYSICIAN SERVICES
ARIZONA, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PACIFIC PHYSICIAN SERVICES
NEVADA, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
PHYSICIANS' HOSPITAL MANAGEMENT
CORPORATION
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
RELIANT HEALTHCARE SYSTEMS, INC.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary
<PAGE>
-11-
MEDPARTNERS/TALBERT MEDICAL
MANAGEMENT CORPORATION
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
TALBERT MEDICAL MANAGEMENT
CORPORATION
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
TALBERT HEALTH SERVICES
CORPORATION
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer
MEDPARTNERS ADMINISTRATION, L.P.
By /s/ James H. Dickerson, Jr.
-------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer of
MedGP, Inc.
MEDPARTNERS PHYSICIAN MANAGEMENT, L.P.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer of
MedGP, Inc.
<PAGE>
-12-
MEDOHIO, L.P.
By /s/ James H. Dickerson, Jr.
-----------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer of
MedPartners Acquisition
Corporation
MEDTEN, L.P.
By /s/ James H. Dickerson, Jr.
-----------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer of
MedPartners Acquisition
Corporation
MEDTEX, L.P.
By /s/ James H. Dickerson, Jr.
-----------------------------------
Name: James H. Dickerson, Jr.
Title: President & Treasurer of
MedPartners Acquisition
Corporation
MEDPARTNERS PHYSICIAN SERVICES OF
ILLINOIS L.L.C.
By /s/ James H. Dickerson, Jr.
-----------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer of
North Suburban Clinic, Ltd.
<PAGE>
-13-
CERRITOS INVESTMENT GROUP
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Executive Vice President &
Chief Financial Officer of
MedPartners, Inc.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Corporate Secretary of
MedPartners, Inc.
CERRITOS INVESTMENT GROUP II
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Executive Vice President &
Chief Financial Officer of
MedPartners, Inc.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Corporate Secretary of
MedPartners, Inc.
FAMILY MEDICAL CENTER
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Vice President & Secretary of
Pacific Medical Group, Inc.
<PAGE>
-14-
5000 AIRPORT PLAZA, L.P.
By /s/ James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Executive Vice President &
Chief Financial Officer of
MedPartners, Inc.
By /s/ Sara J. Finley
------------------------------------
Name: Sara J. Finley
Title: Corporate Secretary of
MedPartners, Inc.
KS-PSI OF TEXAS L.P.
By James H. Dickerson, Jr.
------------------------------------
Name: James H. Dickerson, Jr.
Title: Vice President & Treasurer of
Caremark Physician Services
of Texas, Inc.
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF MEDPARTNERS]
Contact: Investor Relations Media Relations
Tadd McVay Robert Mead
MedPartners, Inc. Gavin Anderson & Co.
Birmingham: 205-982-4265 New York: 212-373-0226
FOR IMMEDIATE RELEASE
- ---------------------
MEDPARTNERS AND STATE OF CALIFORNIA AGREE ON SETTLEMENT TERMS REGARDING
CALIFORNIA PHYSICIAN MANAGEMENT OPERATIONS
Proposed Settlement a Major Step Towards Resolution, Exit from
California Physician Services
BIRMINGHAM, AL, April 9, 1999 - MedPartners Inc., (NYSE: MDM) and the State of
California have reached agreement on the principal terms of a proposed
comprehensive settlement regarding MedPartners' California physician management
operations. Both parties said the proposed settlement will be subject to the
execution and delivery of definitive agreements and other approvals.
The proposed settlement provides for:
. A transition plan for the orderly and timely disposition of the existing
operations of MedPartners Provider Network Inc. (MPN) and MedPartners'
California physician practices assets that would ensure uninterrupted
provision of patient care and fulfillment of management and payment
obligations to MPN-affiliated health care plans and physicians;
. The continued funding of MedPartners California physician management
operations with all of the proceeds from the sale of MedPartners' and MPN's
physician-practice management assets in California, loans from affiliated
health care plans, and additional funding provided by MedPartners;
- more -
<PAGE>
- 2 -
. Restoration of MPN's assets, operations and management responsibilities to
MedPartners, which will operate MPN as a debtor in possession under the U.S.
Bankruptcy Code, subject to oversight and supervision of a new court-
appointed State conservator;
. A continuation of a monitoring role by a new conservator and the State of
California Department of Corporations with primary oversight responsibilities
on the fulfillment of the proposed settlement and transition plan.
"The proposed settlement is a major step towards resolution of the California
situation and is positive for MedPartners and the State of California, as well
as for patients and providers," said Mac Crawford, chief executive officer of
MedPartners. "Once finalized, this settlement puts us on track to carry out the
orderly transition plan that has been in progress. In so doing, we will
continue to meet all obligations to patients, health care plans, hospitals and
physicians as we move forward."
MedPartners said that the proposed settlement agreement will not affect the
previously reported discontinued operations charge, taken in the fourth quarter
of 1998.
Certain statements contained in this press release constitute forward-looking
statements contemplated under the Private Securities Litigation Reform Act of
1995. As such, they involve risks and uncertainties. A discussion of a number
of important factors and assumptions regarding these statements and risks
involved is contained in the Company's most recent filings with the Securities
and Exchange Commission and also in the Company's Quarterly report filed with
the Securities and Exchange Commission on November 16, 1998.
# # #
